The Mmm...Letter
The Mmm...letter Podcast
The Hidden Scale Behind Every Sale

The Hidden Scale Behind Every Sale

Transaction Risk: It's Almost Always One-Sided

In an alternate universe, in a civilization similar to our own, they have no money (gasp).

Without money, a store of value and means of exchange, they are forced to come up with collateral for the goods they wish to purchase. They exchange pales of fish for pairs of shoes, and flat-screen TVs for a three-night stay in Boise.

It’s a labor of love, this universe, because to even produce a flat-screen TV, tens of thousands of market participants each demand a tailored bit of collateral for every exchange. The semiconductor producer responsible for the TV’s itty-bitty computer brain takes payments exclusively in rice, 40-some-odd trillion grains to be exact.

The plastics manufacturer who molds the housing for each TV has a thing for Mexican telenovela stars and beachfront properties in Fort Lauderdale. On it goes as they barter their way through a global supply chain of divas.

Thankfully, this universe is but a figment of the imagination. In our universe, we do have money, we need not barter nor forge an autographed headshot of Salma Hayek every time we buy a 65” from Samsung.

However, the alternate universe marketplace has one advantage that we lack. In barter-land, there are no buyers, and no sellers. In a bartering world, every purchase is an equal exchange agreed upon by both parties.

The moment they trade the deed to a 5-bed 3.5-bath beachfront villa for ten-thousand plastic TV parts, they get the parts, and the plastics manufacturer has a new home in Florida; both sides know the value of what they’ve received is equal to what they’ve exchanged.

In our reality, where we exchange money for things, the question of fairness is ever-present. In an earlier piece, I note that buyers take a leap of faith with every transaction, but what about sellers?

In most cases today, a seller receives cash. Barterism lives on in the margins, but for most transactions that take place between buyer and seller, cash is involved. After the transaction takes place, the seller’s time-to-utility is zero—the thing they receive, money, is useful upon receipt. On the buyer side, that is not always the case.

There are few situations in which buyers are guaranteed to receive utility as quickly or sooner than the sellers. Even if we buy a water bottle to quench our thirst, uncertainty remains—what if the complete lack of electrolytes in that bottled water prevents our body from hydrating? (Fun-fact: milk hydrates better than water).

Which means the 99-cents we hand over in exchange for our planet’s most abundant liquid trapped in a transparent tube made of the planet’s second-most abundant liquid can fail to provide the utility we demand.

However, the seller now has 99-cents, and if they did everything right, a profit which enables expansion and further business—they have money whose utility is a given. And therein lies the flaw in our marketplace.

In our reality, buyers must give away a known quantity for an unknown quantity. And good marketers must keep this in mind. Sometimes the known quantity is small, as is the risk of loss, such as in the bottled water example. But there are many cases where the gap in confidence between buyer and seller is tremendous.

When we buy a house, a car, or designer clothing, anxiety is often our third wheel: is this iridescent pink Chanel scrunchy actually worth three paychecks? And unless the product is terribly under-priced, the seller never feels such anxiety. This inequity is what creates pushy salespeople and scummy marketers.

Those people enjoy the imbalance as they employ psychological tactics to temporarily shrink the confidence gap. Extreme discounts, limited-time offers, unrealizable promises, and big flashing signs that practically read, “you would be stupid not to buy this, Janet,” all help convince the buyer that they’re making the right decision.

I understand that purchases are emotional choices, and will almost always require at least a teensy-tiny poke at our lizard-brain to make them happen. But, that does not excuse us from holding the customer’s hand when and if we should. We have the opportunity, when we face a first-time customer, to provide a utility forecast.

We can reduce their anxiety, through marketing, by telling them how and when our product will fulfill its promise. And when the customer puts it to use, we can go above and beyond to ensure they gain everything they intended from that item.

Because lord knows, when they bought it, we got a guarantee, they got a promise. It’s our job to make sure they ultimately get a guarantee, too.

The Mmm...Letter
The Mmm...letter Podcast
This audio column explores the intersection of culture, business, and morality. But mostly fart poop jokes. Welcome.
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Stanley Bogode